Social and welfare issues

Income Inequality and Poverty

There is widespread concern that economic growth has not been fairly shared, and that the economic crisis has only widened the gap between rich and poor.

The OECD examines the trends and patterns in inequality and poverty for OECD and emerging countries. Its work analyses the multiple causes linked to growing inequalities, such as globalisation, technological change and changes in redistribution and policy fashion. It also assesses the effectiveness of social and labour market policies in tackling poverty and high inequalities.

I‌n October 2015, the OECD Launched the OECD Centre for Opportunity and Equality, a new platform for promoting and conducting policy-oriented research on the trends, causes and consequences of inequalities in society and the economy, and a forum to discuss how policies can best address such inequalities.

The long-run increase in income inequality not only raises social and political concerns, but also economic ones. It tends to drag down GDP growth, due to the rising distance of the lower 40% from the rest of society. Lower income people have been prevented from realising their human capital potential, which is bad for the economy as a whole.This book highlights the key areas where inequalities are created and where new policies are required, including persisting gender gaps; the challenge of high wealth concentration, and the role for redistribution policies, among others.

Data on income inequality and poverty

OECD Income Distribution Database

To benchmark and monitor income inequality and poverty across countries, the OECD relies on a dedicated statistical database: the OECD Income Distribution Database. Due to the increasing importance of income inequality and poverty issues in policy discussion, the database is now annually updated.

Income inequality: Income is defined as household disposable income in a particular year. It consists of earnings, self-employment and capital income and public cash transfers; income taxes and social security contributions paid by households are deducted. Income inequality is measured by five indicators, such as the Gini coefficient and S90/S10, among others.

Poverty rate: The poverty rate is the ratio of the number of people (in a given age group) whose income falls below the poverty line; taken as half the median household income of the total population.

"Compare Your Income'' web tool

How much do you earn compared with others in your country? Do you feel rich, poor, or just average? Use this tool and found out how your income really compares.